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Export Competitiveness: Reducing Services and Costs

In addition to the macro incentive regime, what is also important is that firms have access to efficiently-produced critical backbone services and inputs. Countries where firms have to pay more than their competitors for energy, telecommunications, customs services, transport, logistics, and business registration and operations, will find it hard to compete in the global markets. Hummels (1999) estimates that exporters with 1 per cent lower shipping costs will enjoy a 5-8 per cent higher market share. Limao and Venables (2001) estimate that infrastructure quality accounts for 40-60 per cent of the variation in transport costs. Fink et al (2001) estimate that liberalizing the provision of port services and regulating the exercise of market power in shipping could reduce shipping costs by nearly a third.
In addition to transportation infrastructure and logistics, Francois and Manchin (2007) show that export performance depends also on institutional quality such as access to well developed communication infrastructure, business environment for enforcement of contracts, and overall economic freedom. The findings from the Doing Business reports confirm this.
Towards a Geography of Trade Costs
Author: D. Hummels
University of Chicago, Graduate School of Business, 1999
Infrastructure, Geographical Disadvantage, Transport Costs and Trade
Author: N. Limao and A. Venables
World Bank Economic Review, no. 15, pp 451-479, 2001
Toward an Outward-Oriented Development Strategy for Small States: Issues, Opportunities and Resilience Building
Author: C. Fink, A. Mattoo, and I.C. Neagu
World Bank Economic Review, no. 16, pp 81-108, 2002
Institutions, Infrastructure and Trade
Author: J. Francois and M. Manchin
WB Policy Research Working Paper 2152, March 2007
Useful Websites
Logistics Perception Index (LPI)

Doing Business Database

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